Genentech’s chief executive and other senior executives,
lured to Oregon by a favorable corporate tax climate and additional
incentives, will be greeted Tuesday by the state’s governor,
a congressman and both its U.S. senators at the Hillsboro
plant’s unveiling.

As the state welcomes one of the world’s leading drug
manufacturers, it also harbors hopes that that the Bay Area company
will help kick-start Oregon’s fledgling biotech industry the
way Intel launched its chip trade.

The drug maker, acquired last year by Swiss-based Roche Holdings
for $46.8 billion, comes with a global reach and loads of growth
potential.

Genentech brings valuable experience, knowledge and industry
cachet to Oregon, according to Arundeep Pradhan, vice president of
technology transfer and business development at Oregon Health &
Science University.

"The long-term potential for an expansion of that facility, into
R&D or other areas, is relatively high," he said.

Genentech, which takes up just 15 acres of its 75-acre Hillsboro
campus, has made no promises.

The company employs 250 at its Hillsboro warehouse and factory,
where employees are putting the facility through its paces while
they seek federal manufacturing certification.

Genentech plans to add another 25 workers in 2010, and perhaps
25 more over the next few years. Long-term plans remain
uncertain.

"We purchased 75 acres here so that we had the ability to expand
the operation," said Barry Starkman, the Hillsboro plant’s
manager. "At this point we don’t have any specific plans to
expand any further."

Genentech finished construction in Hillsboro in 2008 and opened
a warehouse on the site in July of that year.

The company already has begun early production in Hillsboro to
win federal approvals. It will eventually make all three of
Genentech’s signature cancer drugs there.

Manufacturing biologic drugs is a complex process that begins by
culturing cells and purifying the product to produce a specific,
cancer-fighting antibody. That work is done at two California
facilities.

Genentech will ship that product to Hillsboro in bulk, where it
will be placed in individual vials for distribution to doctors. The
Oregon factory will be Genentech’s only U.S. facility doing
that kind of work.

About half of Genentech’s Hillsboro staff moved up from
South San Francisco. The company is downsizing production there as
it shifts production away from high-volume manufacturing to
specialize in clinical trials.

Genentech won’t say how much it will pay its Oregon
production workers, but the company has previously indicated the
salaries will range from $35,000 to $65,000 annually.

Oregon landed Genentech four years ago, beating out rivals in
Texas after aggressive recruitment by Gov. Ted Kulongoski and state
economic development officials.

They persuaded Genentech to buy the 75 acres in Hillsboro to
leave room for expansion, according to Bruce Laird, a state
economic development officer who worked on the deal.

"They were really looking for a smaller site," he said. "They
ended up getting a larger one."

Oregon’s corporate income tax structure was a key factor
when Genentech chose Oregon, the company said, which singled out a
feature known as "single sales."

That provision, approved by the Legislature in 2001 and phased
in over several years, made sales within Oregon the primary factor
in determining corporate income tax bills.

Oregon was one of the first states to use that approach, but
it’s now been adopted by nearly half of the country. In
aggregate, it reduced companies’ Oregon income tax burden by
more than half since its approval.

For global corporations which sell nearly all their products
outside Oregon, the change virtually eliminated their state income
taxes.

Additionally, the governor promised $4.8 million in training
assistance for the company’s workers. And Genentech won a
property tax exemption valued at $23 million over the 15-year life
of the deal under Oregon’s Strategic Investment Program.

"Every dollar we don’t spend on taxes go back to
research," said Starkman, the Hillsboro facility’s
manager.

State officials touted the incentives as a down payment on the
state’s biotech industry, which has grown slowly over the
past several years even as bioscience blossomed nationally.